Damas International, the Dubai-based jewellery firm with restructured debts of AED1.8bn ($872m) plans to speed up repayments to its 25 lenders. The company repaid AED200m to the banks in early May.
Damas International also hopes to recover assets bought by members of the founding family, Abdullah Brothers Group, within the next three years.
The brothers withdrew AED300m in cash and two tonnes of gold without shareholder approval and invested the money in unauthorised transactions. The brothers owe Damas International AED614m in total.
“We have finalised the cascade agreement to maximise the recoveries from the Abdullah brothers’ Damas Investments and Damas Real Estate,” says Anan Fakhreddin, chief executive of Damas International.
About 70 per cent of the money taken by the brothers was invested in real estate, 90 per cent of which was in the UAE. “The value of most of the assets are distressed. When conditions improve and there is enough liquidity in the market, the assets will be sold,” says Sanjay Kalsi, chief financial officer of Damas International.
A divestment committee made up of Damas International and Damas Real Estate representatives has been set up to sell the assets.
“Lease rates have gone down 50-60 per cent since 2008. It is a very different market and access to liquidity has changed. The type of property that is selling at the moment are prime trophy assets like the Ritz-Carlton hotel. It depends on the assets that Damas is looking to sell,” says Matthew Green, head of research at the UAE branch of US-based CB Richard Ellis.
If the AED614m is not recovered after the cascade agreement ends, Damas International plans to enter discussion with the Abdullah brothers to find a solution.
Damas recently acquired 49 per cent of its Saudi Arabian operations, raising its stake to 98 per cent. The company will have full operational control.
“Saudi Arabia is one of the core markets for Damas and is one of the largest markets for gold in the world. Our market share in the country was not satisfactory so we decided to take full control to try to maximise market share,” says Fakhreddin.
The company expects a15 per cent increase in revenues this year in Saudi Arabia compared with the previous year.
Damas will focus on core business of manufacturing and distributing jewellery and exit other businesses. Fakhreddin hinted the company is looking to exit some markets as it undertakes an operational restructuring.